Perfect performance is not as common in our world as we would like it to be. It’s hard to rely solely on the honesty of the other party to the agreement, and in the world of cryptocurrency this is especially true. There is a way out – a third-party intermediary, which will hold funds until the execution of the agreement and, if necessary, become an arbitrator in the dispute. Service Confideal in this case can be extremely useful.
The international trade market was approximately $15-20 trillion in 2016, and the real estate investment market should reach nearly $1.4 trillion in 2017. It follows that large international transactions are the backbone of today’s economy. These include: international trade, real estate investment, industrial equipment shipments, etc.
But the problem is that transactions carry inherent risks and costs. In addition to the risks associated directly with the exchange itself, partners have to spend significant resources on contract negotiation and maintenance.
First of all, problems arise when the parties interact (data substitution in the contract, counterfeit signatures, etc.), currency regulation – time costs, and in some cases complete refusal of the bank to make a transfer without explanation, as well as possible arbitration – the average cost of arbitration is currently $2.5 million, and the process takes at least six months.
Eliminating the need to rely on government or counterparties would greatly reduce or eliminate such risks.
Features of Confideal
Confideal is an anonymous service that enables fast, cheap and secure international transactions without third-party involvement. The service is based on Ethereum smart contracts optimized for use by “non-programmers.”
The terms of a smart contract are prescribed before it is entered into and stored in a blockchain. Because of this, the contract cannot be changed after it has entered into force – only closed or terminated under predetermined arrangements.
All transactions on Confideal’s platform are conducted via cryptocurrency, which completely eliminates payment barriers. The absence of an intermediary bank in the transaction avoids unnecessary control procedures and eliminates the risk of payment reversal by its decision. In addition, the speed of the transaction is significantly increased, and its cost is reduced.
Launching a contract requires the presence of money in it, after which its movement is only possible under the terms of the contract.
What’s important is that you don’t need to create smart contracts manually, because this requires programming skills or the additional cost of hiring an outside programmer.
How are disputes resolved?
Users have the ability to resolve disputes within the platform. The service allows third-party law firms, lawyers and mediators to handle disputes between the parties. These are qualified professionals who are competent in resolving disputes and act as arbitrators.
Arbitrators (law firms, lawyers) create a special account within the service and put their data there (languages, location, specialization, work experience). The arbitrators are motivated by a commission for the disputed contract – up to 10% of the contract amount.
The choice of arbitrator for a particular contract is made by mutual agreement of the parties at the time of organizing the transaction (before signing). For now, only one arbitrator per transaction is available, but in the future it will be possible to select multiple arbitrators.
Arbitrage is represented by two modules:
1. Court of Arbitration – Arbitrators’ awards have statutory grounds for referral to national courts for eventual enforcement by bailiffs. Arbitral tribunals are subject to national laws and the laws of international arbitration under UNCITRAL. As this module involves national courts – it takes longer to enforce the award.
2. Mediation – by agreement of the parties, a third party is chosen to settle the dispute and decide whether to enforce the decision. Mediation is more convenient to enforce because it does not follow the rigid regulation of national law or international legal norms, but rather acts on the basis of the agreement of the parties to the contract.
Arbitrator ranking is available to ensure a high level of arbitration services. It allows bona fide and professional arbitrators to rank higher on the list, thus receiving more referrals from users.
The main internal cryptocurrency for settlement in the Confideal ecosystem is the Confideal token (CDL). It is developed using the ERC20 standard on the Ethereum blockchain, which makes it fully interoperable with any other projects that also use this standard.
ETH (Ether) can be used for settlements between participants – when making transactions using it, a commission of 1% of the transaction amount is charged. When paying for the contract with CDL tokens, the user is exempt from the fee. CDLs can be purchased during an ICO or by repurchasing from owners on online exchanges.
In the future, the cryptocurrencies ETC (Ether classic), EOS (EOS) and XTZ (Tez) as well as tokens based on the ERC20 standard are additionally planned.
What’s notable is that Confideal guarantees redemption of CDL tokens in exchange for ERC20 tokens from other projects (Bancor, Aragon, BAT, Gnosis and others), provided they are sufficiently available.
Confideal application possibilities
Service Confideal is not an independent platform, so its economic basis is web-platforms, online shops, social networks, forums, etc.
Confideal can be used in the following cases:
1. Trade in goods, including international trade using GPS tracking – this may be the shipment of goods across borders or simply from one place to another without customs.
2. Implementation of services offline and online – in this case, it is important to note in the contract how the performance of services will be reported. In the case of online interaction between the client and the contractor – it can be uploading code to a repository, a link from a file-sharing site, photo/video content sent by email, etc. When signing a contract for an offline service, it is important to spell out how the contractor will be reported – for example, by sending scans of documents via email or by having the customer be directly present.
3. Long-term contracts with deferred or staggered payment – provides for staggered contract proceeds as obligations are met.
4. Selling real estate for cryptocurrency using escrow – in this case, the escrow agent is a software code, which significantly reduces the transaction fee.
5. Multilateral contracts involving multiple parties, with activation at different stages – for example, it is appropriate to give the example of wholesale delivery of goods by one supplier to multiple customers. Customers are pooled together, after which the supplier ships the goods. Then, as the shipment arrives, a progressive payment is made by each customer individually.
6. Cryptocurrency collateral – renting cars, jewelry, appliances, etc.
7. Rental property with IoT devices (smart locks) – hotels, motels, and hostels have the ability to put electronic locks connected to the Internet on room doors. Integration with the network allows the entire process of check-in and accommodation of guests at a distance in an automatic mode – from payment for reservation and receipt of an electronic key, and ending with the departure from the room. In this case Confideal can be used to hold a deposit for the duration of the stay.
How do I use Confideal?
Since the Confideal app requires a connection to the Ethereum blockchain, it requires special software: the Parity and Mist browsers, as well as the MetaMask extension for Google Chrome.
Of the available options, MetaMask is the easiest as it runs inside the Chrome browser and unlike Mist and Parity does not require a full node configuration. MetaMask will be both a wallet and a key to the Confideal user cabinet, as well as a digital signature to trigger smart contracts.
In order to use the Confideal contracting service, the following steps must be taken:
1. Download and install MetaMask plugin for Google Chrome browser.
2. Buy one of the cryptocurrencies that are supported by Confideal platform.
3. Login to the Confideal application using MetaMask.
4. Create a contract and fill in all details: contract name, agreement text, price, due date, counterparty wallet address. Optionally, prepayment and penalty options are available.
5. Sign and pay for the contract. After the user fills all the data of the contract – he signs it using his MetaMask wallet, and sends it to the other party for signing. The counterparty also signs the contract using his/her MetaMask wallet. At this stage, the payment of the contract takes place – when signed, the client side places the entire amount of the contract on the smart contract, where it is stored until the contract is closed or terminated.
6. Launch the contract. Once both parties have signed a smart contract, the Confideal service automatically launches it into the Ethereum blockchain on which it is stored permanently.
7. Close a trade. After a certain time has elapsed, several options are possible: successful closing of the trade, aborting and closing the trade, as well as aborting and arbitrating.
What do the creators of the service themselves say?
BitNovosti editors contacted the creators of the service and asked them to answer a few questions:
Who already uses Confideal service and on which particular “web-platforms, online-shops, social networks, forums and other third-party sites” it can be potentially implemented and are there already some agreements with their owners?
Now the users are mostly freelancers who work for cryptocurrency – because real businesses still more often prefer fiat. In other words, the clients of the service are ordinary people using or offering any services, programmers and designers, and there are also a couple of buyers of mining equipment.
The service is designed for any platforms that unite potential users. In particular, these are B2B-platforms, where exchange of goods or services takes place and where we need not only offers, but agreements. These can be freelance platforms and even usual forums where people agree on something.
Among our partners, it is worth mentioning such a large B2B-platform as export.ru. But so far we mostly work with foreign companies that use cryptocurrency, in particular, with Irish ones.
The service is supposed to be used in the field of freelance services, but in order to evaluate the work of a freelancer it is necessary to understand the specifics of the subject in question – how will it be solved involving many qualified specialists from various fields, and who and by what criteria will select them?
Specialists who are competent in the field of dispute resolution are engaged. In doing so, the parties themselves choose that company. They go into the database that we need to stuff. We welcome professionals to come make money on our platform. Of course, the parties choose a competent professional – if, in their opinion, one is not found on our platform, they can invite them themselves to make an account and become an arbitrator in our ecosystem.
And what is the procedure required to obtain this status?
Creating an account and uploading all the necessary information is done by a professional. He needs to enter as much data as possible, which will increase his credibility as a professional.
To interact with the service, an extension for Google Chrome, MetaMask, is offered, which is also used as a wallet. Is it safe to store money in the browser? What security recommendations can you give to potential users?
Yes – you need MetaMask extension to use the service, but, of course, you should not store all the money in your browser, because there are “cold wallets” for that. You should not store anything in your browser on the “hot” wallet and use private keys.
How feasible is it still to give such smart contracts real legal force at the state level in the future?
Of course, the more users there are in cryptocurrency, the higher the chance. If there are no people, businesses, funds in this area, the authorities will not pass the necessary legislation. We need to create a movement: mitaps, conferences, apps, legislative initiatives – for now everything is on its own, thanks to enthusiasts. Only afterwards the authorities get involved and try to regulate it all. It is only necessary to increase the volume of this market without slowing down.
Can a user appeal against an arbitrator’s decision if he or she strongly disagrees and has valid reasons for doing so?
An arbitrator’s decision shall not be subject to appeal. In arbitral tribunals, the decision is not appealable. Of course, if there is an indication of fraud or unfairness, then the whole thing has to be transferred to a real court with that arbitrator. We are also considering the creation of a mechanism to replace the arbitrator in cases beyond the control of the parties to the contract. This only applies if both parties are not satisfied with the resolution of the dispute. The issue is that when the arbitrator contacts the parties, he asks for the entire database of the case. He is given a certain period of time to review the case objectively. If he makes a decision that contradicts circumstances that were beyond the control of a certain party, that decision can be appealed to a regular court. The advice to users is to choose arbitrators who they think will be objective.
Is the arbitrator liable financially if there is an error in resolving the dispute between the parties?
Now the arbitrator is not liable, but we are considering a feature such as the arbitrator’s guarantee. For high value contracts, performers and arbitrators will deposit the amount necessary to secure the contract.
Confideal is an established service, but plans to plug in new features, so it is starting an ICO, which will run from November 2 to November 22, 2017 or when the set token maximum is reached. The price of 1,000 CDL tokens will be equal to 1 Ether (ETH) and the fundraising goal is 70,000 ETH.
Video instruction with MetaMask installation demonstration:https://www.youtube.com/watch?v=XUrshsdbxPs
BitNovosti.com publishes a press release about this ICO “as is” and the information provided cannot be considered investment advice on the part of the editorial staff. The reader performs his or her own analysis and makes the decision to invest in the project at his or her own risk.
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